High inflation blow to Govt's credibility - Montek Singh Ahluwalia

New Delhi: Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia has said if inflation does not come down by the beginning of next year, it would be a clear that the government is clueless about how to tackle the rising prices. Speaking exclusively to Karan Thapar on the Devil's Advocate, Ahluwalia made it clear that it's not just the Opposition that is criticising the government.

He, however, maintained that the government is taking all steps to curb the rising inflation and said that it will come down by the end of this fiscal year.

Ahluwalia said,"The government is certainly worried about inflation. Its true that inflationary pressure is higher than what we had thought it would be. The RBI has taken a number of steps.

It's too early to say its not having an impact. All the research shows that monetary tightening takes at least 3-6 months. Maybe by the end of the fiscal year which is really march 2012 you will see inflation coming down."

Ahluwalia said that the short-term forecasting of inflation is subject to error.

He, however, admitted that if the January data shows no decline in inflation, then it means that the government doesn't know what it is doing.

"It's absolutely true that we have been hoping that this would happen earlier and to that extent our credibility becomes questioned. We should recognise that short-term forecasting is subject to error. By February you will have the January data and if it turns out that inflation is not coming down by then than we really don't know what we are doing," he said.

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